Movers Company manufactures sneakers. The production of their new sneaker for the coming three months is budgeted as follows:
August 30,000
September 50,000
October 35,000
Each sneaker requires 2 hours of direct labor time. Direct labor wages average $15 per hour. Monthly overhead averages $10 per direct labor hour plus fixed overhead of $4,500. What is the direct labor cost budgeted for September?
a.$1,400,000
b.$1,500,000
c.$750,000
d.$625,000
e.$820,000

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Dryomys Dryomys · Answer 1 · 2019-12-13T09:29:45+01:00

Answer:

Option (b) is correct.

Explanation:

Given that,

Budgeted production (September) = 50,000

Direct labor time for producing each sneaker = 2 hours

Direct labor wages average = $15 per hour

Direct labor budget for September:

= Budgeted production of sneaker in September × direct labor time require for each sneaker × Direct labor wages average per hour

= 50,000 × 2 hour × $15

= $1,500,000

Therefore, the direct labor cost budgeted for September is $1,500,000.